set aside the judgment of the General Court of the European Union of 15 March 2018 in Case T-507/15, Republic of Poland v Commission, in so far as the following pleas in law, raised in the action seeking annulment of Commission Implementing Decision (EU) 2015/1119 of 22 June 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (notified under document C(2015) 4076), 1 were rejected in that judgment:

(a) the second part of the first plea in law, relating to the effectiveness of on-the-spot controls in regard to pre-recognised producer groups, and

(b) the second part of the second plea in law, relating to the assessment of the risk of loss to the Fund and the level of the flat-rate correction applied in relation to expenditure incurred in the context of the measure ‘Fruit and Vegetables — Pre-recognised Producer Groups’;

annul Commission Implementing Decision (EU) 2015/1119 of 22 June 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (notified under document C(2015) 4076), in so far as it excludes from European Union financing the amount of EUR 55 375 053.74 in expenditure incurred by the payment agency accredited by the Republic of Poland;

order the European Commission to pay the costs, both at first instance and on appeal.

Grounds of appeal and main arguments

In the judgment under appeal the General Court dismissed the Republic of Poland’s action for annulment of the European Commission’s decision excluding from European Union financing the amounts of EUR 142 446.05 and EUR 55 375 053.74 in expenditure incurred by the payment agency accredited by the Republic of Poland in the context of the measures ‘Fruit and Vegetables — Operational Programmes’, and ‘Fruit and Vegetables — Pre-recognised Producer Groups’, respectively.

The Commission accused the Republic of Poland of three infringements in connection with its spending on the measures referred to above. Those infringements concerned, first, on-the-spot controls regarding the fulfilment by producer organisations of the criteria for recognition (in terms of the number of controls), second, on-the-spot controls preceding the grant of pre-recognition to producer groups or recognition to producer organisations, and, third, support paid to producer organisations towards seed costs in the context of operational programmes.

The second of the infringements referred to above was based on the fact that, according to the Commission, the Polish authorities did not verify, before granting pre-recognition to producer groups and before granting recognition to producer organisations, the minimum required value of marketed production, namely the fundamental criterion for recognition. In the Commission’s view, the on-the-spot controls carried out by the Polish authorities in that regard were ineffective. The Commission considered those controls to be key controls, and the finding by the Commission of infringement was the basis for its imposition of a flat-rate correction of 10% on expenditure in connection with both the measure ‘Fruit and Vegetables — Operational Programmes’ and the measure ‘Fruit and Vegetables — Pre-recognised Producer Groups’.

The Republic of Poland raises the following grounds against the judgment under appeal:

– finding that the controls of producer groups preceding pre-recognition were ineffective, despite the Commission’s position of 1 March 2011 confirming the effectiveness of those controls.

In this ground of appeal, the Republic of Poland submits, first, that the General Court improperly related findings pertaining to irregularities in controls of producer organisations — namely Vegapol and Zrzeszenie Plantatorów Owoców i Warzyw in Łowicz — preceding their recognition to the assessment of the effectiveness of controls of producer groups preceding their pre-recognition. Furthermore, the Republic of Poland submits that the General Court manifestly distorted the facts relating to the contradictions alleged by the Republic of Poland between the Commission’s letter of 1 March 2011, confirming the effectiveness of the controls carried out by the Polish authorities preceding the grant of pre-recognition to producer groups, and the letter of 24 February 2014, in which the Commission accuses the Republic of Poland of infringement in that regard. Those distortions led the General Court to draw wholly incorrect conclusions regarding the ineffectiveness of the controls of producer groups preceding the grant of pre-recognition to those groups.

2. Breach of the right to effective judicial review regarding the level of the flat-rate correction applied by the Commission.

In connection with this ground of appeal, the Republic of Poland submits that the General Court failed to carry out a judicial review as to the correctness of the determination by the Commission of the level of the flat-rate correction for the measure ‘Fruit and Vegetables — Pre-recognised Producer Groups’. In particular, the Republic of Poland submits that the General Court restricted its review exclusively to ascertaining whether the controls at issue were key controls within the meaning of the Guidelines of 23 December 1997 for the calculation of financial consequences when preparing the decision regarding the clearance of the accounts of the EAGGF Guarantee (document VI/5330/97). However, the General Court did not examine all of the other elements which the Commission should have taken into consideration when calculating the risk of loss to the EU budget and setting the level of the flat-rate correction.

3. Insufficient statement of reasons for the judgment under appeal, in so far as the General Court found that the Commission:

– had provided prima facie evidence of the existence of irregularities in the controls of producer groups preceding pre-recognition; and

– had applied the correct level of flat-rate correction.

In the context of this ground of appeal, the Republic of Poland submits that there was a failure to state reasons in the judgment under appeal in so far as the General Court found, first, that the controls of producer groups preceding the grant of pre-recognition to those groups were ineffective and, second, that the flat-rate financial correction of 10% in relation to the measure ‘Fruit and Vegetables — Pre-recognised Producer Groups’ was applied correctly.